Question

Green Corporation has total sales revenues of $400,000. If its total fixed costs are $70,000 and its total variable costs are $180,000, the contribution margin is Group of answer choices $330,000. $250,000. $550,000. $220,000. Flag question: Question 11 Question 1110 pts Frost Company has a contribution margin per unit of $49. If 10,000 more items are sold, and fixed expenses remain the same, the net change in operating income will be Group of answer choices $343,000. ($343,000). $490,000. $7,000. Flag question: Question 12 Question 1210 pts Stanley's Bicycles store buys bicycles on average for $600 and sells them on average for $750. He pays a sales commission of 15% of sales revenue to his sales staff. Stanley pays $1,400 a month rent for his store, and also pays $3,000 a month to his staff in addition to the commissions. Stanley sold 200 bicycles in June. If Stanley prepares a contribution margin income statement for the month of June, what would be his contribution margin

Answer 1

Answer:

Part 1

the contribution margin is $220,000

Part 2

the net change in operating income is $270,000

Part 3

Stanley's Bicycles contribution margin is $7,500

Explanation:

Green Corporation Contribution Margin Statement

Sales revenues                 $400,000

Less Variable costs          ($180,000)

Contribution                      $220,000

Less Fixed Cost                 ($70,000)

Net Income                         $150,000

Frost Company Contribution Margin Statement

Contribution  ($49 x   10,000)                  $490,000

Less Fixed Cost                                         ($70,000)

Net Income                                                $420,000

Change = $420,000 - $150,000 = $270,000

Stanley's Bicycles Contribution Margin Statement

Sales Revenue ($750 x 200)                     $150,000

Less Variable Costs :

Cost of Sales ( $600 x 200)                     ($120,000)

Commission ($150,000 x 15%)                  ($22,500)

Contribution                                                   $7,500

Less Fixed Costs

Rent expense                                                ($1,400)

Salaries                                                         ($3,000)

Net Income                                                     $3,100